For Britannia Industries Ltd, the key overhang of dual pricing is now behind. Dual pricing caused a temporary disruption for the company in rural and wholesale channels in April and May, with normalization in June, the management said in the June quarter (Q1FY27) earnings call.
So, the biscuit-maker’s year-on-year revenue growth towards the end of Q1 was in mid-teens. For the full quarter, Britannia’s consolidated operating revenues increased 9.5% year-on-year to ₹4,964 crore. Pricing normalization and continued media investments drove sequential market share gains.
Competing biscuit makers sold entry-level packs at interim price points such as ₹4.5 and ₹8.9 following GST adjustments, while Britannia stuck to ₹5 and ₹10 price points. This mismatch, referred to as dual pricing, led to uneven trade margins and some loss of market share for Britannia. Low-unit packs form 60% of Britannia’s sales, thus weighing on the pricing mix and margins.
Volumes rebound
Q1FY27 volume rose 9% on resilient demand across key markets, aided by broad-based consumption trends. The domestic general trade channel, which was under pressure in the last two quarters, recovered, with growth rates 1.5x faster in Q1FY27 than in FY26. Other alternate channels such as e-commerce and quick-commerce grew 2.5x the rate of general trade.
Key states—six states that contribute over 50% of domestic revenue—delivered 1.8x FY26 growth in Q1FY27, while other states grew double-digits at 1.3x the rate of key states. Adjacent categories of cakes, rusks, dairy and wafers reported double-digit growth.
“After the past few quarters of low volume growth and market share erosion, Britannia now seems to have turned the corner on both counts, clawing back some of the share losses as the odd-MRP pack advantage enjoyed by competitors subsides,” said Systematix Shares and Stocks (India) report dated 7 August.
Margin squeeze
Gross margin expanded year-on-year but contracted sequentially to 41.5%. Input cost inflation is emerging as a headwind. Costs of LPG/PNG, palm oil, sugar and milk stayed elevated. Only around 50% of commodity inflation was passed on in Q1FY27 through grammage cuts, with a large part of the impact expected in the coming quarters, implying about 3% pricing growth.
Q1FY27 Ebitda margin fell sequentially to 16.8%, missing consensus estimates amid increased advertisement spends. HDFC Securities notes that the next two quarters carry a high-margin base, so it expects around 50 basis points of margin moderation and low double-digit earnings growth.
International business was weak, as sales were impacted by the West Asia war. Operations, particularly in North America and West Asia, faced localized challenges, whereas markets in Africa, led by Kenya, showed robust performance.
Sequentially, international markets are beginning to stabilize and sales are likely to turn positive from Q2FY27, the management said.
Local playbook
Innovations continue to gain traction, with Britannia launching ‘Dubai Kunafa Croissant’ in Q1FY27. The management is looking to prioritize localization through region-specific business strategies, for which it has formed regional teams.
Overall, the outlook for Q2 appears relatively better.
“Britannia appears to have moved past its rough patch, with the new leadership revamping the execution team and sharpening its focus on reigniting growth across multiple fronts,” said HDFC Securities, adding that achieving diversification while holding stable margins will be the key ahead.
From its 52-week high of ₹6,336 seen in September, the stock is down 13% and trades at a rich FY28 price-to-earnings multiple of 43, showed Bloomberg data.